IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20140611

Docket: M89340

Registry:
New Westminster

Between:

Laureen Sikora

Plaintiff

And

Anthony Gordon
Brown

Defendant

–
and –

Docket: M045156

Registry:
Vancouver

Between:

Anthony Gordon
Brown

Plaintiff

And

Laureen Sikora,
Mann Motors Ltd.

Defendants

And

Insurance
Corporation of British Columbia

Third
Party

Before:
The Honourable Mr. Justice Verhoeven

Reasons for Judgment re Costs

I.                
Introduction

[1]            
These are rulings with respect to costs in these two matters, consequential
to the decision I rendered January 9, 2014.  That decision is indexed as Sikora
v. Brown, 2014 BCSC 30.

[2]            
There are two applications before me:

A.    Ms. Sikora,
as plaintiff in the action she brought, (the “Sikora action”), seeks an order
for 80% of her costs and disbursements in that action;

B.    Ms. Sikora (in
practical terms, ICBC as her insurer) as defendant in the action brought by Mr. Brown
(the “Brown action”) seeks an order pursuant to R. 9-1(5)(d) of the Supreme
Court Civil Rules, B.C. Reg. 168/2009 [the Rules], for costs
in her favour from November 7, 2013 (11 days prior to the commencement of the
trial), based upon an offer to settle ICBC made to Mr. Brown on that date.

[3]            
Mr. Brown argues that there should be no costs to either party, in
either action.

II.              
Overview

[4]            
These two actions were tried together.  Both actions arose out of a
motor vehicle accident that occurred December 14, 2002.  On that occasion Ms. Sikora
was driving her leased 1989 Ford Escort, owned by Mann Motors Ltd.  Mr. Brown
was her passenger.  The vehicle left the roadway and crashed into a ditch,
resulting in injuries to both Ms. Sikora and Mr. Brown. Each party
sued the other, blaming each other for causing the accident.

[5]            
A 12 day trial commenced November 18, 2013.  I ruled that the accident
was caused by the combined negligence of both parties, and held that each was
therefore liable to the other for 50% of their respective claims.  As to costs,
I said that success was divided, and no party would be entitled to costs,
subject to matters of which I was unaware.  The parties were given liberty to
apply in respect of costs, and have done so.  My comment regarding costs in my
reasons were made without the benefit of any submissions as to costs and in
particular, were made without reference to the application of s. 3 of the Negligence
Act, R.S.B.C. 1996, c. 333.

[6]            
For reasons having to do with insurance coverage, representation of the
parties at trial was more complex than usual, and the facts relating to these
applications are very unusual.  The insurance coverage issues are relevant to
the exercise of my discretion with respect to costs.

[7]            
ICBC denied coverage to Mr. Brown in the Sikora action.  This explains
why Mr. Harding represented Mr. Brown both as plaintiff in his action
and as defendant in the Sikora action.  I am informed that Mr. Brown has
brought an action against ICBC for coverage, but that determination of the
issues raised in that action may take some time, as the parties to that action
have chosen to await the outcome of another action, Felix v. ICBC, 2014
BCSC 166, which is currently under appeal.

[8]            
In her capacity as plaintiff in the action she brought, Ms. Sikora
was represented in the proceedings and at trial by her own counsel, Mr. Buxton. 
In her capacity as defendant in the action brought against her by Mr. Brown,
Ms. Sikora was represented by counsel appointed on her behalf by ICBC, Mr. Urquhart.

[9]            
In his action Mr. Brown named as a defendant Mann Motors Ltd., the
lessor of the Sikora vehicle.  Mann Motors Ltd. took no part in the trial. 
ICBC filed a third party notice in relation to the claims against Mann Motors
Ltd.  However its counsel Mr. James was excused at the outset of the
trial.

III.            
Analysis and Discussion

A.             
Sikora Action Costs

[10]        
Ms. Sikora was awarded $80,000 for non-pecuniary loss, $39,397 for
net past income loss, and $221.55 for special damages.  Thus her total award
was $119,618.55.  Based upon the liability decision, she is entitled to recover
50% of that amount, $59,809, from Mr. Brown.  She has presented a draft
bill of costs in the amount of $35,728 for fees including taxes on legal fees,
and $24,434.41 for disbursements.  Thus if allowed as presented, her costs
would be $60,193.91, before reduction.

[11]        
Mr. Brown’s award was $54,550, subject to some adjustments for Employment
Insurance and ICBC TTD payments.  Thus Ms. Sikora’s insurer is obliged to
pay Mr. Brown 50% of his claim, which is $27,275, subject again to the adjustments.
I do not have a draft bill of costs for Mr. Brown as plaintiff.

[12]        
Under the s. 3(1) of the Negligence Act, the usual rule in
this case would be that each of Ms. Sikora and Mr. Brown would be
entitled to 50% of their costs in their respective actions, which costs would
be set off against the other.

[13]        
Mr. Brown is personally responsible for paying Ms. Sikora’s
costs.  ICBC would be responsible for paying Mr. Brown’s costs.

[14]        
The relevant legal principles and considerations are conveniently
summarized in the decision of Beames J. in Siewart v. Elden, 2008 BCSC
88, as follows:

[4] The general rule, as set out in s. 3(1) of the Negligence
Act, R.S.B.C. 1996, c. 333, is that a party is liable for costs in the same
proportion as his or her liability for damages. Application of that section in
this case would result in the plaintiff being entitled to only 50 percent of
her costs in this action.

[5] However, the court has an unqualified discretion to
depart from the usual rule, as long as there is some reason connected to the
case to justify the exercise of the discretion to depart from the usual rule: Peters
v. Davidson, [1981] 125 D.L.R. (3d) 753 (B.C.S.C.), aff’d (1982), 41
B.C.L.R. 330 (C.A.); Moses v. Kim, 2007 BCSC 1820.

[6] With respect to departing from the usual rule, and the
considerations which apply to the exercise of the discretion, they have been
neatly summarized by Gray J. in Moses v. Kim as follows (at paras.
11-13):

The principal consideration for the court
is whether an injustice will result by following s. 3(1): see Forsyth v.
Sikorsky Aircraft Corp. (2002), 100 B.C.L.R. (3d) 66, 2002 BCCA 231.

In Moore v. Dhillon (1993), 85
B.C.L.R. (2d) 69 (C.A.), Taylor J.A. explained how the usual rule, as s. 3(1)
of the Negligence Act was then construed, might work well in some
circumstances but result in an injustice in others (at para. 13):

While the s. 3 prima facie rule may
work well in cases where liability is divided between defendants only, and
where there are cross-claims between plaintiff and defendant, there is
potential for injustice when the prima facie rule is applied without
exercise of discretion in cases, such as this, where division of fault is as
between a successful personal injury plaintiff and a defendant who has suffered
no injury or damage, or who has already been fully compensated for any injury
or damage suffered. This is demonstrated by the Law of Reform Commission of
B.C. in its 1993 report entitled ‘Apportionment of Costs and Contributory
Negligence: Section 3 of the Negligence Act.’ The prima facie rule would
plainly work an injustice in the present case.

The authorities demonstrate many factors
the court has considered in exercising this discretion. Among them are the
following:

(a)  the seriousness of
the plaintiff’s injuries;

(b)  the difficulties
facing the plaintiff in establishing liability;

(c)  the fact that in
settlement negotiations the amount offered was substantially below the ultimate
amount;

(d)  whether the
plaintiff was forced to go to trial to obtain recovery;

(e)  the costs of
getting to trial;

(f)   the difficulty
and length of the trial;

(g)  whether the costs
recovery available to the plaintiff, if costs are apportioned according to
liability, will bear any reasonable relationship to the party’s costs in
obtaining the results achieved;

(h)  the positions
taken by the parties at trial, in particular whether the positions taken were
appropriate and reasonable in the circumstances;

(i)   whether the
defendants made any settlement offers;

(j)   the ultimate
result of the trial; and

(k)  whether the
plaintiff achieved substantial success that would be effectively defeated if
costs were awarded pursuant to s. 3(1) of the Negligence Act.

See Forsyth, supra, and Logeman v. Rossa, [2006] B.C.J. No. 963 (QL), 2006 BCSC
692

[15]        
In Siewart, there were two actions, involving two accidents,
which were heard together by a jury.  The jury decided that the plaintiff was
50% contributorily negligent in Siewart v. Elden, and the defendant was
not liable in the other action, Siewart v. Quirk.  The jury awarded the
plaintiff $164,275, before reduction for the split in liability.  For a number
of reasons applicable to the case before her, Beames J. concluded that an
injustice would result if the usual rule under s. 3(1) of the Negligence
Act were to be applied.  She ordered that the plaintiff recover 90% of her
taxable costs, and 100% of her disbursements, and that she recover 100% of the
costs recoverable against her by the defendant Quirk.

[16]        
In my view it cannot be said that an injustice will result by following
s. 3(1) in the circumstances of this case.

[17]        
This is not a case, as in Moore v. Dhillon, (1993), 85 B.C.L.R.
(2d) 69 (C.A.), where “…division of fault is as between a successful personal
injury plaintiff and a defendant who has suffered no injury or damage, or who
has already been fully compensated for any injury or damage suffered…”.  In
this case, both parties were injured.  Both went to trial on the same footing:
that is, that they had suffered injury and blamed the other for causing the
accident.  Liability was clearly going to be a difficult issue at trial, given
the circumstances that I related in the judgment in that respect.  The outcome
was highly uncertain for both parties.  Therefore both parties equally faced “difficulties
in establishing liability”.  Both were in some sense “forced to go to trial to
obtain recovery” although both could have recognized that the economics of
going to trial were questionable, given the nature of the claims, the costs of
proceeding to trial and the uncertain outcome.

[18]        
Neither party made particularly realistic offers of settlement in the
Sikora action.  The precise details are not in before me in documentary form,
but I was informed at the hearing of the application that sometime “late in the
day”, which I interpret to mean near the trial date, Ms. Sikora offered to
settle her claims for $125,000 plus costs.  I was also informed that the offer
was not open for acceptance for long.  On the eve of trial Mr. Brown
offered to pay Ms. Sikora $20,000, including costs and disbursements.  That
offer was withdrawn during the course of the trial.

[19]        
Ms. Sikora had less to lose by going to trial, in that her
liability as defendant was covered, and she had the benefit of ICBC counsel to
defend her.

[20]        
I cannot say that the costs of getting to trial or the difficulty and
length of the trial are significant factors on either side of the issue.

[21]        
Ms. Sikora’s injuries were more serious than those suffered by Mr. Brown;
however that is already reflected in the amounts awarded.

[22]        
Success at trial was equal, of course, in terms of liability.  Ms. Sikora
was more successful than Mr. Brown on their respective quantum issues. 
However in her capacity as plaintiff she did not need to defend against Mr. Brown’s
quantum claims, which were dealt with by ICBC.

[23]        
The reasonableness of the positions the parties took at trial in overall
terms with respect to Ms. Sikora’s claims is not a significant factor
bearing on the justice of the usual costs rule.  Although Mr. Brown’s
submissions were less realistic than those of Ms. Sikora with respect to
the quantum of her non pecuniary loss, he did not contest her wage loss or
special damages.

[24]        
I would not say that the “plaintiff achieved substantial success that
would be effectively defeated if costs were awarded pursuant to s. 3(1) of
the Negligence Act”.  She achieved partial success in difficult
litigation with doubtful economics.  Her net recovery is consistent with those
fundamentals.

[25]        
In submissions counsel for Ms. Sikora referred to several other
authorities regarding the exercise of the court’s discretion under s. 3(1)
of the Negligence Act: Wong-Lai v. Ong, 2012 BCSC 1569; Moses
v. Kim, 2009 BCCA 82; Bourelle v. Andrychuk, [1998] B.C.J. No. 2508
(C.A.); Shahidi v. Oppersma, [1999] B.C.J. No. 353 (S.C.).  These
cases are all decided on the basis of their facts.  All of them involved a
single action where the plaintiff was found contributorily negligent but the
defendant had suffered no loss or damage.  No case was provided to me dealing
with facts similar to those before me.

[26]        
In summary, I see no reason to depart from the usual rule, and therefore
Ms. Sikora will receive 50% of her assessed costs and disbursements, in
accordance with the general rule set out in s. 3(1) of the Negligence
Act.

B.             
Brown Action Costs

[27]        
In the action brought by Mr. Brown, ICBC on behalf of Ms. Sikora
seeks an order that Mr. Brown pay costs pursuant to R. 9-1(5)(d) from
November 7, 2013 (11 days prior to the commencement of the trial).  It is
unclear whether ICBC also seeks to deprive Mr. Brown of costs following
the offer, in accordance with Rule 9-1(5)(a).

[28]        
Subject to ICBC’s application, applying the usual rule under the Negligence
Act, Mr. Brown would receive 50% of his costs against Ms. Sikora.

[29]        
On November 7, 2013, ICBC offered to pay Mr. Brown $91,661.35 “new
money,” that is, in addition to sums previously advanced of $8,338.65. The
total settlement offer was therefore $100,000.  In addition ICBC offered to pay
costs.  The offer conformed with R. 9-1.  The offer was made jointly on behalf
of ICBC as third party and on behalf of Ms. Sikora as defendant.

[30]        
As noted, Mr. Brown’s award at trial was considerably less than the
offer made.  The award was $54,550, and when reduced by 50%, was $27,275.

[31]        
The relevant factors are set out in R. 9-1(6), as follows:

(6) In making an order under subrule (5), the court may
consider the following:

(a) whether the offer to settle was
one that ought reasonably to have been accepted, either on the date that the
offer to settle was delivered or served or on any later date;

(b) the relationship between the
terms of settlement offered and the final judgment of the court;

(c) the relative financial
circumstances of the parties;

(d) any other factor the court considers appropriate.

[32]        
The terms of Rule 9-1(5) are permissive, in that the court “may” impose
one of the costs consequences set out in the subrule: Buttar v. Di Spiritto,
2009 BCSC 72, at para. 17.  The court retains a broad discretion to define
and fix an appropriate costs award, provided it exercises its discretion with a
view to the considerations in subrule (6): Brewster v. Li, 2014 BCSC
463 at para. 16, citing Bailey v. Jang, 2008 BCSC 1372, at paras. 10,
18, and Bennett v. Scanlan, 2010 BCSC 50.

[33]        
Clearly ICBC’s offer was very favourable when measured against the
result Mr. Brown obtained at trial.  However the circumstances were
complicated by the coverage problems Mr. Brown had.  As Mr. Brown
through his counsel made very plain at the time, the difficulty for Mr. Brown
in accepting the offer was that it would not resolve the claims against him by Ms. Sikora,
for which he was uninsured, and facing trial.  On his behalf Mr. Harding
suggested that ICBC should “admit liability” on behalf of Ms. Sikora. 
What was apparently meant was an admission of liability by ICBC in conducting
the defence of claims against her, which Mr. Harding intended to use to preclude
her claims as plaintiff against Mr. Brown.  Mr. Harding stated that
he was very sure he could obtain instructions to accept the offer if it meant
that Mr. Brown would not have any liability to Ms. Sikora.  However Mr. Urquhart
refused to make such an admission, and I doubt very much whether ICBC had
authority to do so.  ICBC through Mr. James refused to reconsider its denial
of coverage, and advised Mr. Brown that he would have to resolve Ms. Sikora’s
claims directly, himself.

[34]        
I am not on this application in a position to assess whether ICBC was
right or wrong to deny coverage.  That will be for another day.

[35]        
Mr. Urquhart, as Ms. Sikora’s defence counsel, was not involved in
any negotiations relating to Ms. Sikora’s claim as plaintiff.

[36]        
As noted, although the precise timing is not in evidence, I infer that
at about the same time as Mr. Brown was considering ICBC’s offer of
$100,000 he received Ms. Sikora’s offer to settle for $125,000.  On that
basis Mr. Brown could not accept ICBC’s offer and settle with Ms. Sikora
without being in a net loss position.  Looked at from an overall perspective,
in Mr. Brown’s position at the time, the offer was not very favourable. He
was in a difficult position.

[37]        
What was needed in the circumstances was a three way settlement involving
Ms. Sikora, Mr. Brown, and ICBC.  There were no negotiations on this
basis. Mr. Brown was never presented with an offer that would have completely
resolved both actions.

[38]        
In retrospect, Mr. Brown would have been better off if he had
accepted the offer to settle.  However I consider it difficult to conclude the
offer was one that “ought reasonably have been accepted” in the unusual circumstances
of this case.  He was essentially refusing to settle his claims unless the
claims against him were settled at the same time.  This was not unreasonable. 
However ICBC refused to do deal with him on this basis, rightly or wrongly.

[39]        
 The financial circumstances of the parties and other appropriate
factors are of some relevance in this case. Mr. Brown is personally
responsible for paying Ms. Sikora’s costs claims, which will likely exceed
his own costs recovery, in view of her extra expense before and at trial for
experts.  Thus I think it likely that even without the order that ICBC seeks Mr. Brown
will pay more in costs than he receives.  It seems excessively onerous for him
to also shoulder the personal financial burden of ICBC’s costs, in
circumstances where he was also injured in the accident and liability is shared
equally.

[40]        
ICBC has not presented a draft bill of costs in relation to its claims. 
I received no submission as to how ICBC’s costs claim would juxtapose with the
costs claim of Ms. Sikora as plaintiff.  It appears that if ICBC’s
application is allowed, the result would be that Ms. Sikora could receive
duplicate costs for the some of the same items; one set as plaintiff in her
action, and another set as defendant in the Brown action.  This would not be
appropriate.

[41]        
The intent of s. 3 of the Negligence Act is that each party
to an action is liable for costs in the same proportion as their respective
liability.  The result ICBC seeks is not consistent with the intent of
s. 3, which I have decided should be applied in the companion case, and
subject to the effect of R. 9-1, would be applicable in the Brown action as
well.  It seems anomalous that I should make a costs award in the Brown action
that is inconsistent with the award made in the Sikora action, where in form at
least the parties are the same and the Negligence Act purports to make
them both liable for costs.

[42]        
In all of the circumstances I do not consider it appropriate to make the
order that ICBC seeks.

IV.           
Conclusions

[43]        
Ms. Sikora will recover 50% of her assessed costs and disbursements
against Mr. Brown in the Sikora action, and Mr. Brown will receive
50% of his assessed costs and disbursements from Ms. Sikora in the Brown
action, without abatement in respect of the offer to settle.

[44]        
Success has been divided on Ms. Sikora’s application.  Ms. Sikora
has been awarded 50% of her costs, but not 80% as she sought.  Mr. Brown’s
contention that neither side should pay any costs has not been accepted.  There
will be no costs payable on that application.

[45]        
Mr. Brown has been successful in defeating ICBC’s application for
costs based upon its offer to settle, and should receive costs of that
application.

“Verhoeven J.”